Navigant Research Blog

During the course of most conversations about electric vehicles, the phrase “range anxiety” eventually shows up. Many observers believe that EVs’ range of 100 miles or less will keep some consumers on the sidelines, but real-world EV driving results can tell a different story, depending on how the data is interpreted and depending on one’s viewpoint.

The trial found that so-called ‘range anxiety’ meant drivers were over-cautious when planning journeys. The maximum journey length was 17.8km, just 25% of the average range of the vehicles, which was 72.4km. This range anxiety also meant that 93% of journeys were begun with the battery charged above 50%, and people also begin to modify their driving style when the battery’s state of charge approached 50%.”

So was it that people were afraid to let the battery power indicator fall below 75 percent, or was it that the trips they needed to take were that short? Many gas car drivers are conservative about not letting the tank go below half full, so a similar conservatism shouldn’t be unexpected. If the EVs that are being lent out during these trials are driven in urban areas, then driving trips of 12 miles or less are likely to be the norm. Drivers are likely being overly cautious because it is unfamiliar technology, and since their driving patterns are being monitored, they don’t want to be known as the driver who got stranded with the dead battery. And since most of these vehicles are probably second cars, drivers are likely to use the gas vehicle on longer trips.

Data from Pike Research’s Electric Vehicle Consumer Survey showed that 73 percent of drivers of gas vehicles use their cars for 30 miles or less per day, which likely includes a work commute plus and errand or two. This reinforces that many trips would only drain a minority of an EV’s batteries.

The industry is of two different minds when it comes to how much charging will be done at home. While many folks in the EV world believe that about 80 percent of charging will occur overnight at home, a vocal minority including IBM believe that just as much charging will be done away from home, and that a robust public infrastructure is necessary to allay range anxiety fears.

The range provided by EVs is likely insufficient as a primary vehicle for many consumers. However those who commit to EVs will learn how to maximize their electric miles while avoiding being stranded sans battery power. But the more that the “threat” of range anxiety is repeated, the more that perception will become reality.

John Gartner is a senior analyst at Pike Research, a market research and consulting firm that provides analysis of global clean technology markets. John can be reached at john.gartner@navigantresearch.com.

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The enthusiasm is building –we’re just a few months from the U.S. launch of the first electric vehicles aimed at mainstream consumers. Nissan is touting the success of the registration program for its upcoming Leaf EV, boasting 13,000 orders for its vehicles.

It is hoped across the industry (and in Washington DC) that sales of EVs will revive the American auto industry. While Pike Research believes that sales of EVs will grow relatively quickly, EV sales would likely grow much higher if it weren’t for our relatively cheap gasoline.

China will be the global leader in EV sales, with more than a quarter million of EVs sold in 2015, according to our projections at Pike Research. Sales of EVs in Europe – even with fewer homes with convenient access to home charging – are expected to outpace the American market.

As shown in the table below, the cost of fuel in the U.S. is the lowest in the world thanks to lower taxes. While the average cost of electricity is also among the lowest in the world, the relative cost of fuel to electricity is the lowest in the world.

We calculated the annual savings of driving an EV instead of an equivalent passenger car and found that American drivers would save less than half as much (just over $800) by switching to an EV as drivers in Japan, France, Great Britain and Norway, who can save up to $2,000. This model even allows that in Europe, more fuel-efficient cars would be replaced (30 mpg was assumed for vehicles in the U.S., and 35 mpg diesel vehicles in Europe).

This simplistic model does not include the cost of the vehicle or any consumer tax incentives. Still it underscores how much can be saved by operating the vehicle. Smaller annual savings means a longer time to pay back the premium that EV buyers are likely to pay. While many of the early EV owners will be thinking more about the environment (and showing off to their neighbors) than about their wallets when buying, a shorter payback period would help to convince consumers who are more price-sensitive to purchase an EV.

In Europe, gasoline is more than 2.5 times the price in the U.S. thanks to higher taxes. In the EU, seventeen states also charge CO2-related taxes on passenger cars, according to the European Automobile Manufacturers Association.

Major efforts are underway in the U.S. to install charging equipment in metropolitan areas, and federal (up to $7,500) and state incentives will make EVs more affordable to prospective buyers. But raising the gas tax or adding a carbon tax would likely be the most direct route to increasing EV adoption here.

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Hydrogen fuel cells have been the “silver bullet” promise for clean transportation for many years. Long enough that now that silver is in need of some polishing.

However, there were two announcements that caught my eye this week, not for the announcements themselves, but for what they represent. The first announcement was during the National Hydrogen Association meeting in early May 2010 from Toyota regarding the cost of fuel cell vehicles. The second from GM and Hawaii’s The Gas Company regarding providing hydrogen as a fuel.

In Toyota’s announcement, they claim that their fuel cell vehicle will cost $50,000 by mid-decade (I’m assuming these are 2010 dollars and it will actually cost more than when adjusted to 2015 dollars). This is the first time someone has put a number around the cost of fuel cell vehicles for public launch. For the sake of argument, let’s assume this is about right, so we have a strong price point for a Lexus fuel cell vehicle here in North America. Toyota has said that they will only do the technology if they can be profitable with it (I don’t really believe that Toyota expects to make a profit at the $50,000 price point in the first few years). There are essentially keys to making this technology profitable: reducing the amount of platinum inside the fuel cell stack and increasing production to help reduce costs (note I’m ignoring market issues for the moment). Platinum at the time of this writing was priced at $1,506/ounce. Toyota’s current fuel cell Highlander has 30 grams (1.06 ounces) of platinum costing $1,596/stack. Obviously, cutting this in half or by a third will have an impact on the final cost of the vehicle. Needless to say the challenges for Toyota (and others) remain, but this does provide a glimpse of the target automakers are pursuing.

As a slight aside, I would expect the price of platinum to increase if it’s truly on the verge of becoming a key component to the automobile industry. An increase in demand for platinum will cause an increase in the price without substantial increase in supply to match. However, I am not expecting much increase in the price before 2015 or 2016 when production of fuel cells ramps up and platinum industrial usage increases.

The GM and Hawaii’s The Gas Company’s announcement is aimed at providing hydrogen refueling stations, the other key piece of this marketplace. The Gas Company (the largest natural gas utility on Oahu) will begin using hydrogen from their pipeline of synthetic natural gas to develop refueling stations. The synthetic natural gas has hydrogen added to it such that it reaches 5% of the gas in the pipeline, which can then be separated at fueling points into pure hydrogen. This will reduce the cost of setting up refueling stations substantially. Some estimates have that stations that use this separation technology would cost $300,000 to $500,000 to install (compared to over $1,000,000 for current hydrogen stations depending on type or $150,000 for a gasoline station). This is expected to result in hydrogen costs similar to that of gasoline, and because it is being provided through a pipeline, it could serve 15,000 vehicles or more. The closed “ecosystem” of Hawaii’s marketplace where gasoline is expensive and The Gas Company is already providing hydrogen is a perfect fit for this kind of experiment, but in other parts of the country this type of arrangement may prove more challenging with other utility companies.

Both of these announcements represent the gains the industry is working towards in terms of costs. While hydrogen station availability has been the focus of a lot of debate and concern for fuel cell vehicle development, the root problem has always been profitability of the stations (or lack thereof, to be more precise). GM and The Gas Company’s announcement shows that we may now have the potential to cut the costs of installation in half, reducing capital outlay and overhead costs. Toyota has put a target out there for automakers for the vehicles and it’s within reason for mainstream luxury brands and (in theory) a profitable number for them.

So, do these announcements mean that the fuel cell vehicle market is likely by 2015 as promised? Not quite, but it is not hard to imagine a quickening pace of station availability now that gas suppliers could have a demonstrated method for reducing stations construction and a target for vehicle pricing for consumers.